Daily Bullets………..For April 14, 2014

• Good news on retail sales!.... March retail sales up 1.1% were much better than expected. The strength was across the board, driven by strong demand for autos, furniture, clothing, building materials, etc.  The really positive aspect is the breadth and reflection that economy and consumer spending, are performing well, and perhaps better than many expected. This supports our long-held outlook for the economy in 2014, unfolding as we anticipated, which has positive implications for stocks. Article link: http://money.msn.com/business-news/article.aspx?feed=OBR&date=20140414&id=17521612
• Another positive sign for U.S. economy…..Job outlook: Reuters reports this morning that U.S. consumers are growing more confident about the job market as the estimated chance of finding a new job increased to 49.0% up from 46.1% in February. This is another reflection of improving consumer sentiment generally and has positive implications for both economy and consumer spending. Article link: http://money.msn.com/business-news/article.aspx?feed=OBR&Date=20140414&ID=17522768&topic=TOPIC_ECONOMIC_INDICATORS&isub=3
• “It can’t be done with current information at hand”…. Jim Cramer has an interesting article out this morning questioning why certain sectors in the market are behaving the way they have been in this recent market pullback (today notwithstanding). His ultimate conclusion is: you can’t determine from available data (as to why sectors such as machinery have done well if investors are concerned about the economy). Hmmm….. Could it be that fundamental investors, or what we would refer to as “strong hands”,  are looking through the near-term noise and are focused on what continues to be pretty solid economic fundamentals, particularly for the U.S.? We think so. Article link: http://money.msn.com/top-stocks/post--why-is-this-market-so-hated-and-feared
• More easing ahead for ECB? ……We note over the weekend, it was reported that Eurozone banks will only pay back 6 billion (Eurodollar) of their crisis loans, which is below the 8 billion that was expected. The implication is Euro bank liquidity is not improving as rapidly as hoped for. Should this be any big surprise? We think not. It reflects more of the same for Europe: recovery will continue to be slow, ECB policy will remain highly accomodative. Article link: http://money.msn.com/business-news/article.aspx?feed=OBR&Date=20140414&ID=17522672&topic=TOPIC_ECONOMIC_INDICATORS&isub=3
• Lower federal deficits…..CBO this morning is reporting it expects U.S. federal budget deficits to be nearly $300 billion lower than previously expected. CBO now expects federal deficit to reach a low-point of $469 billion, or 2.6% of GDP in 2015, then gradually rise to over $1 trillion in 2024. This has positive implications for interest rates near term, as it indicates that marginal demand for credit by U.S. government should ease somewhat in next year or two. It has negative implications for the longer term as funding of increased Federal deficits could place upward pressure on interest rates and remains a long-term structural problem for the U.S. Fortunately, our economy is large and resilient enough to handle a lot of this future financial “pressure” but it is problematic nonetheless. Article link: http://money.msn.com/business-news/article.aspx?feed=OBR&Date=20140414&ID=17522837&topic=TOPIC_ECONOMIC_INDICATORS&isub=3